Target Costing Example Westerly Cosmetics has developed its own patented formula for a new anti-aging cream. The company anticipates that it will sell 400,000 units of the product in the first year with the following estimated costs: Product design and licensing $1,700,000 Direct materials 4,000,000 Direct manufacturing labor 1,600,000 Variable manufacturing overhead 400,000 Fixed manufacturing overhead 2,500,000 Fixed marketing 3,000,000 The company believes that it can successfully sell the product for $45 a bottle. The company's target operating income is 30% of revenue. Calculate the target full cost of producing the 400,000 units. Does the cost estimate meet the company's requirements?